Tag: public employee pension plans

On Tuesday, the Governor of Wisconsin, Scott Walker, survived the much-watched recall election initiated by the state’s public employees. Closer to home the City of San Jose overwhelmingly approved pension reform, Measure B, that gives current city workers "the option of switching to a lower pension or staying in the current plan and paying off pension debt with annual contribution increases" - the city was sued immediately thereafter. While many voters, including me, support serious public pension reform, it is a mistake to blame the entire problem on the unions; doing so would let the other actors - the employees, the elected officials, and ultimately the public - off the hook.

The public has little understanding of the complex CalPERS retirement system, yet it is one of local government’s largest expenses with annual estimated costs of more than $10 million a year, 30 percent of payroll, for Hollister and San Benito County combined. Some of the highest costs are side deals where public agencies pay all or a portion of the employees’ premiums. This problem belongs to local politicians who know it does not show up in the salary tables and therefore avoids public scrutiny. The upshot is that many members contribute little or nothing to their CalPERS retirement. CalPERS is really two systems, one for most “Miscellaneous Employees” and one for “Public Safety Employees.” Both offer a “full retirement” at a young average age, but at extremely different levels.

Last week I discussed the size of CalPERS retirement pensions. The key point was that the there are large variations between employee groups. The bottom three groups retiring in FY 2010-11 – all miscellaneous employees – averaged $21,000 to $38,000 at 21 years service and age 61. The top two groups – local police/firefighters and the state Highway Patrol – averaged $84,000 to $92,000 a year at 28 years service and age 54. Between those extremes were other local agency and state public employees. Errata: The chart last week should have read “E-7 Sgt. First Class” – not “E-7 First Sergeant.”

Unless you’re in the CalPERS retirement system, there is a good chance that you may not understand how it works. Before going into the great debate over local plans, I thought it best to do a series of columns explaining how it works and who pays what.